Health Care Dominates Rewards Mix, Benefits Survey Reveals

Of all the types of benefits that organizations provide to their employees, health care remains a top focus, particularly as employers continue to weigh the various effects of the Affordable Care Act (ACA), according to the Society for Human Resource Management’s
2015 Employee Benefits research report, released June 29 at the SHRM 2015 Annual Conference & Exposition. The findings are based on a survey of SHRM members conducted in March 2015.

While few organizations are eliminating health care benefits as a result of federal reforms, many are changing the composition of those plans—in some cases relying more heavily on a preventive approach that can reduce health care expenses—and shifting a greater burden of costs onto employees.

The cost of health care constrains the types of other benefits that organizations feel they can afford to offer. Nevertheless, “in an environment with limited compensation growth in most sectors of the U.S. economy, a competitive benefits package can make the difference in attracting top talent to an organization,” said Evren Esen, SHRM’s director of survey programs. “Research has shown that many job seekers frequently place a greater degree of importance on health care coverage, flexible work schedules and other benefits, in some cases more so than on their base salaries.”

Five-Year Trends

The survey revealed the following developments in key benefits areas:

Health care and welfare benefits. From 2011 to 2015, a growing percentage of organizations offered mental health care coverage, contraception coverage, vision insurance, short-term disability insurance, health savings accounts (HSAs), critical illness insurance, employer contributions to HSAs and coverage for laser-based vision surgery. Compliance with the ACA may be affecting the growing prevalence of these benefits, although steady increases in the cost of health care over the last decade have led organizations to explore health care options that actively involve employees in their health care decisions. For instance, 43 percent of organizations offer HSAs, an increase of 8 percentage points over the last five years, and 30 percent offer employer contributions to HSAs, a 10 percentage-point increase over the last five years.Meanwhile, while the decline in the percentage of organizations offering medical flexible spending accounts (FSAs) was slight, down from 73 percent to 69 percent over the five-year period, and a steeper falloff occurred among those offering health care premium FSAs that allow for premium conversion through a Section 125 cafeteria plan, from 45 percent to 34 percent.

Preventive health and wellness benefits. The past five years have seen increases in the percentage of organizations offering general wellness programs, health care premium discounts for employees’ participation in various programs, health and lifestyle coaching, and preventive programs specifically targeting employees with chronic health conditions.

Retirement savings and planning benefits. The majority of organizations continue to offer defined contribution retirement savings plans, and more organizations offer Roth 401(k) or similar plans in 2015 than did in 2011. Furthermore, a greater percentage of organizations have provided one-on-one individual investment advice and retirement preparation advice. However, there were substantial declines in the number of organizations offering defined contribution plan loans.

Leave benefits. While there were no statistically significant differences in paid vacation plans, fewer organizations offered a paid vacation leave donation program and a paid vacation cash-out option in 2015 than in 2011. However, several leave benefits increased in 2015 compared with 2014, including paid sick leave, paid family leave, paid maternity leave, parental leave above federal Family and Medical Leave Act (FMLA) leave, and parental leave above state FMLA leave.

Health Benefit Trends

Over the past five years, the percentage of employers offering the following health benefits showed statistically significant change.

Benefit

2011

2015

Mental health coverage

82%

91%

Vision insurance

76%

87%

Contraceptive coverage

69%

83%

Short-term disability insurance

66%

74%

Health savings accounts (HSAs)

35%

43%

Critical illness insurance

22%

34%

Health care premium flexible spending account

45%

34%

Long-term-care insurance

29%

32%

Employer contributions to HSAs

20%

30%

Laser-based vision correction coverage

22%

30%

Experimental/elective drug coverage

5%

9%

Gender reassignment surgery coverage

2%

5%

Source: 2015 Employee Benefits, a SHRM research report.

Ensure Benefits Are Valued

Actions that employers can take to make sure that their benefits offerings are valued by employees include the following:

Make employees aware of the benefits they have. “Considering that benefits plans are a crucial segment of recruitment and retention efforts, it is paramount that HR professionals communicate the advantages of these benefits to employees as often as possible,” Esen advised. Less than one-tenth of HR professionals said their employees were “very knowledgeable” about the employer-sponsored benefits available to them, according to recent SHRM research. And many admit that they need to do more to improve this situation—only about 1 in 5 said that their benefits communication was “very effective” in informing employees. “Using social media and various forms of internal communication systems can be an effective approach for HR professionals’ benefits strategies,” she pointed out.

Continuously obtain feedback on the effectiveness of benefits in recruiting and retaining employees. The workforce is constantly evolving, and these shifts influence how employees perceive their benefits plans. The marketplace is also continually undergoing change, so benefits programs must be regularly assessed to make sure that employees understand the value of their benefits packages and that the organization is remaining competitive in the marketplace. “The use of benchmarking tools, benefits needs assessments and employee surveys may become even more widespread as technology helps make them more accessible and cost-effective,” Esen noted.

Health Care Coverage Offered to Employees and Their Dependents

Percentage of polled SHRM members who said their organizations provided health coverage to the groups shown below.

Full-time employees

99%

Part-time employees

30%

Opposite-sex spouses

80%

Same-sex spouses

62%

Opposite-sex domestic partners

37%

Same-sex domestic partners

41%

Dependent children

95%

Nondependent children

13%

Foster children

30%

Dependent grandchildren

26%

Source:
2015 Employee Benefits, a SHRM research report. (The findings are based on a survey of SHRM members conducted in March 2015, prior to the Supreme Court's ruling on same-sex marriage.)